Assailed via this petition for review ofpetitioner Rodolfo N. Regala is the May 26, 2009 Decision1 of the Court of Appeals which affirmed with modification the May 29, 2006 Decision2 of the Regional Trial Court (RTC) of Las Piñas City, Br. 255 in Civil Case No. LP-99-0058, ordering petitioner to pay respondent Federico P. Carin moral and exemplary damages and attorneyís fees.

Petitioner and respondent are adjacent neighbors at Spirig Street, BF Resort Village, Las Piñas City. When petitioner decided to renovate his one storey residence by constructing a second floor, he under the guise of merely building an extension to his residence, approached respondent sometime in May 1998 for permission to bore a hole through a perimeter wall shared by both their respective properties, to which respondent verbally consented on condition that petitioner would clean the area affected by the work.

As earlier indicated, petitionerís real intention was to build a second floor, in fact with a terrace atop the dividing wall. In the course of the construction of the second floor, respondent and his wife Marietta suffered from the dust and dirt which fell on their property. As petitioner failed to address the problem to respondentís satisfaction, respondent filed a letter-complaint3 with the Office of the City Engineer and Building Official of Las Piñas City on June 9, 1998.

In his letter-complaint, respondent related that, despite the lack of a building permit for the construction of a second floor, petitioner had demolished the dividing wall, failed to clean the debris falling therefrom, allowed his laborers to come in and out of his (respondentís) property without permission by simply jumping over the wall, and trampled on his vegetable garden; and that despite his protestations, petitioner persisted in proceeding with the construction, he claiming to be the owner of the perimeter wall.

Several "sumbongs"4 (complaints) were soon lodged by respondent before the Office of Barangay Talon Dos against petitioner for encroachment, rampant invasion of privacy and damages arising from the construction, and for illegal construction of scaffoldings inside his (respondentís) property.

As no satisfactory agreement was reached at the last barangay conciliation proceedings in December 1998, and petitioner having continued the construction work despite issuance of several stop-work notices from the City Engineerís Office for lack of building permit, respondent filed on March 1999 a complaint5 for damages against petitioner before the RTC of Las Piñas City.

In his complaint, respondent alleged in the main that, instead of boring just one hole as agreed upon, petitioner demolished the whole length of the wall from top to bottom into five parts for the purpose of constructing a second floor with terrace; and that debris and dust piled up on respondentís property ruining his garden and forcing him to, among other things, shut some of the windows of his house. Respondent thus prayed for the award of moral and exemplary damages.

Petitioner, denying respondentís allegations, claimed in his Answer6 that he was the sole and exclusive owner of the wall referred to as a perimeter wall, the same having been built within the confines of his property and being part and parcel of the house and lot package he purchased from the developer, BF Homes, Inc., in 1981; that the issue of its ownership has never been raised by respondent or his predecessor; and that securing the consent of respondent and his neighbors was a mere formality in compliance with the requirements of the Building Official to facilitate the issuance of a building permit, hence, it should not be taken to mean that he (petitioner) acknowledges respondent to be a co-owner of the wall. He added that he eventually secured the requisite building permit7 in March 1999 and had duly paid the administrative fine.8

Further, petitioner, denying that a demolition of the whole length of the wall took place, claimed that he and his contractorís laborers had been diligently cleaning respondentís area after every dayís work until respondent arrogantly demanded the dismantling of the scaffoldings, and barred the workforce from, and threatening to shoot anyone entering the premises; and that the complaint was instituted by respondent as leverage to force him to withdraw the criminal case for slander and light threats9 which he had earlier filed against respondent for uttering threats and obscenities against him in connection with the construction work.

At the trial, after respondent and his wife confirmed the material allegations of the complaint, petitioner took the witness stand and presented his witnesses.

Architect Antonio Punzalan III10 testified that he installed GI sheets to prevent debris from falling onto respondentís property and had instructed his workers to clean the affected area after every work day at 5:00 p.m., but they were later barred by respondent from entering his property.

Engineer Crisostomo Chan11 from the Office of the Building Official of Las Piñas City testified, among other things, on the circumstances surrounding the complaint for illegal construction filed by respondent and that a building permit was eventually issued to petitioner on March 15, 1999.

Engineer Sonia Haduca12 declared that upon a joint survey conducted on the properties of both petitioner and respondent in December 1998 to determine their exact boundaries, she found an encroachment by petitioner of six centimeters at the lower portion of the existing wall negligible, since the Land Survey Law permits an encroachment of up to ten centimeters.

By Decision of May 29, 2006, Branch 255 of the Las Piñas City RTC rendered judgment in favor of respondent whom it awarded moral damages in the sum of P100,000, exemplary damages of P100,000 and attorneyís fees of P50,000 plus costs of suit.13

In finding for respondent, the trial court declared that, apart from the fact that petitioner knowingly commenced the renovation of his house without the requisite building permit from the City Engineerís Office, he misrepresented to respondent his true intent of introducing renovations. For, it found that instead of just boring a hole in the perimeter wall as originally proposed, petitioner divided the wall into several sections to serve as a foundation for his firewall (which ended up higher than the perimeter wall) and the second storey of his house.

The trial court further declared that respondent and his family had thus to contend with the noise, dust and debris occasioned by the construction, which petitioner and his work crew failed to address despite respondentís protestations, by refusing to clean the mess or install the necessary safety devices.

Applying Article 2176 of the Civil Code on quasi-delicts, the trial court ruled that petitioner was at fault and negligent for failing to undertake sufficient safety measures to prevent inconvenience and damage to respondent to thus entitle respondent to moral and exemplary damages.

On appeal by petitioner, the Court of Appeals affirmed the trial courtís decision with modification by reducing the award of moral and exemplary damages to P50,000 and P25,000, respectively. The appellate court anchored its affirmance on Article 19 of the New Civil Code which directs every person to, in the exercise of his rights and in the performance of his duties, act with justice, and observe honesty and good faith.

By Resolution14 of July 10, 2009, the appellate court denied petitionerís motion for reconsideration as well as respondentís prayer in his Comment that the original awards made by the trial court be restored.

Hence, petitionerís present petition faulting the appellate court in

Affirming with modification the decision of the trial courtÖ.considering the absence of any competent proof to warrant the grant of moral and exemplary damages as well as attorneyís fees.15 (underscoring supplied)

Petitioner maintains that since moral and exemplary damages are compensatory in nature, being meant neither to punish nor enrich, the claimant must establish that not only did he sustain injury but also that the other party had acted in bad faith or was motivated by ill will. To petitioner, respondents failed to discharge this burden. He adds that the trial court did not delve into whether petitionerís renovations were the primary cause of respondentís claimed injuries, viz violation of privacy, sleepless nights and mental anguish, among other things, as it instead focused on the lack of a building permit as basis for the awards.

Rebutting the testimony of respondentís wife as to the alleged unauthorized intrusion of petitionerís workers into respondentís property in order to erect scaffoldings, petitioner points out that such an undertaking would take a considerable length of time and could not have gone unnoticed had consent not been given by respondent.

Moreover, petitioner posits, if consent had truly been withheld, there was nothing to prevent respondent from dismantling or immediately removing the offending structures Ė a course of action he did not even attempt.

In his Comment16 to the petition, respondent quotes heavily from the appellate and trial courtís findings that fault and negligence attended petitionerís renovation, thus justifying the award of damages. He goes on to reiterate his plea that the awards given by the trial court in its decision of May 29, 2006 should be reinstated.

The petition is partly impressed with merit.

The trial courtís award of moral and exemplary damages, as affirmed by the appellate court, was premised on the damage and suffering sustained by respondent arising from quasi-delict under Article 217617 of the Civil Code. Thus the trial court explained:

Indeed, there was fault or negligence on the part of the defendant when he did not provide sufficient safety measures to prevent causing a lot of inconvenience and disturbance to the plaintiff and his family. The evidence presented by the plaintiff regarding the dirt or debris, as well as the absence of devices or safety measures to prevent the same from falling inside plaintiffís property, were duly established. It did not help the cause of the defendant that he made a lot of misrepresentations regarding the renovations on his house and he did not initially have a building permit for the same. In fact, it was only after the construction works were completed that the said permit was issued and upon payment of an administrative fine by the defendant.18

In prayers for moral damages, however, recovery is more an exception rather than the rule. Moral damages are not meant to be punitive but are designed to compensate and alleviate the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar harm unjustly caused to a person. To be entitled to such an award, the claimant must satisfactorily prove that he has suffered damages and that the injury causing it has sprung from any of the cases listed in Articles 221919 and 222020 of the Civil Code. Moreover, the damages must be shown to be the proximate result of a wrongful act or omission. The claimant must thus establish the factual basis of the damages and its causal tie with the acts of the defendant.

In fine, an award of moral damages calls for the presentation of 1) evidence of besmirched reputation or physical, mental or psychological suffering sustained by the claimant; 2) a culpable act or omission factually established; 3) proof that the wrongful act or omission of the defendant is the proximate cause of the damages sustained by the claimant; and 4) the proof that the act is predicated on any of the instances expressed or envisioned by Article 2219 and Article 2220 of the Civil Code.21

In the present case, respondent failed to establish by clear and convincing evidence that the injuries he sustained were the proximate effect of petitionerís act or omission. It thus becomes necessary to instead look into the manner by which petitioner carried out his renovations to determine whether this was directly responsible for any distress respondent may have suffered since the law requires that a wrongful or illegal act or omission must have preceded the damages sustained by the claimant.

It bears noting that petitioner was engaged in the lawful exercise of his property rights to introduce renovations to his abode. While he initially did not have a building permit and may have misrepresented his real intent when he initially sought respondentís consent, the lack of the permit was inconsequential since it only rendered petitioner liable to administrative sanctions or penalties.1avvphi1

The testimony of petitioner and his witnesses, specifically Architect Punzalan, demonstrates that they had actually taken measures to prevent, or at the very least, minimize the damage to respondentís property occasioned by the construction work. Architect Punzalan details how upon reaching an agreement with petitioner for the construction of the second floor, he (Punzalan) surveyed petitionerís property based on the Transfer Certificate of Title (TCT) and Tax Declarations22 and found that the perimeter wall was within the confines of petitionerís property; that he, together with petitioner, secured the consent of the neighbors (including respondent) prior to the start of the renovation as reflected in a Neighborís Consent23 dated June 12, 1998; before the construction began, he undertook measures to prevent debris from falling into respondentís property such as the installation of GI sheet strainers, the construction of scaffoldings24 on respondentís property, the instructions to his workers to clean the area before leaving at 5:00 p.m;25 and that the workers conducted daily clean-up of respondentís property with his consent, until animosity developed between the parties.26

Malice or bad faith implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity; it is different from the negative idea of negligence in that malice or bad faith contemplates a state of mind affirmatively operating with furtive design or ill will.27 While the Court harbors no doubt that the incidents which gave rise to this dispute have brought anxiety and anguish to respondent, it is unconvinced that the damage inflicted upon respondentís property was malicious or willful, an element crucial to merit an award of moral damages under Article 2220 of the Civil Code.

Petitioner, however, cannot steer clear from any liability whatsoever. Respondent and his familyís rights to the peaceful enjoyment of their property have, at the very least, been inconvenienced from the incident borne of petitionerís construction work. Any pecuniary loss or damage suffered by respondent cannot be established as the records are bereft of any factual evidence to establish the same. Nominal damages may thus be adjudicated in order that a right of the plaintiff, respondent herein, which has been violated or invaded by the defendant, petitioner herein, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.29

WHEREFORE, the petition is GRANTED. The May 26, 2009 Decision of the Court of Appeals is VACATED. The Court orders petitioner to pay respondent the sum of P25,000 as nominal damages.

No costs.

SO ORDERED.

CONCHITA CARPIO MORALESAssociate Justice

WE CONCUR:

ARTURO D. BRIONAssociate Justice

LUCAS P. BERSAMINAssociate Justice

MARTIN S. VILLARAMA, JR.Associate Justice

MARIA LOURDES P. A. SERENOAssociate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courtís Division.

CONCHITA CARPIO MORALESAssociate JusticeChairperson

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersonís Attestation, I certify that the conclusions in the above decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courtís Division.

17 Article 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no preexisting contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.

The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article, may also recover moral damages.

The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned in No. 9 of this article, in the order named.

20 Article 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently and in bad faith.